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17 April 2024

Iran sees oil at $40, no rebound expected soon

Iran wants Opec to cut output further to bring balance to the oil market. (AP)

By Reuters

Iran's oil ministry anticipates a crude oil price of about $40 a barrel in 2009, oil minister Gholamhossein Nozari was quoted as saying yesterday, suggesting Tehran does not expect the market to rebound soon.

Nozari also said crude producers outside the Organisation of the Petroleum Exporting Countries (Opec) were not co-operating with the group in reducing output to restore stability, the official Irna news agency reported.

US light crude oil settled on Friday at around $36.5 per barrel, down more than $110 since July as the global economic downturn hit energy demand.

"In the opinion of the Oil Ministry, taking into account predictions by various international institutes, the anticipated oil price in the year 2009 will be around $40," Nozari said, according to the Iranian news agency.

Nozari said the ministry had proposed to the government that the price of oil be set at that level in the 2009-10 budget, which runs from March.

Opec ministers agreed in December to cut production by a record 2.2 million barrels per day (bpd), taking total curbs since September to 4.2 million barrels per day, the equivalent of five per cent of global oil supply.

But Nozari said supply from non-Opec producers was expected to grow by 600,000 barrels per day during the year, without naming them.

"Under these conditions Opec member countries decided to cut output but non-Opec countries are not co-operating," he said.

Russia, the world's second-largest oil exporter, faced criticism from Opec last month for refusing to join in the effort to support energy prices.

Russia has said it is considering all options, including joining Opec, to defend its national interests. However it did not make any firm pledges when Opec ministers, meeting at Oran in Algeria in December, agreed their deepest production cuts.

State radio quoted Iran's Opec governor Mohammad Ali Khatibi as saying the producer group should reduce output further to bring balance to the oil market.

On the issue of Opec members' observance of earlier cuts before the Algeria meeting, Nozari said: "The percentage of observance by 11 Opec members, with the exception of Iraq, was in all reported as 85 per cent. The worst performance belonged to Algeria which did not have any cut in its oil production."